City turns to judge for lawsuit advice

Tuesday

Nov 20, 2012 at 12:01 AM

STOCKTON - The city today will ask the judge overseeing its bankruptcy to help navigate three lawsuits, including one filed by former Fire Chief Ron Hittle, who wishes to take his case to trial despite an obstacle created by Stockton's Chapter 9.

Scott Smith

STOCKTON - The city today will ask the judge overseeing its bankruptcy to help navigate three lawsuits, including one filed by former Fire Chief Ron Hittle, who wishes to take his case to trial despite an obstacle created by Stockton's Chapter 9.

A man suing the city after befalling a serious motorcycle accident also wants his trial, while the city wishes to settle a third lawsuit by paying $55,000 to a man who accused police of needlessly roughing him up on a street corner notorious for drug sales.

The common thread in two of these cases is a provision of the federal bankruptcy code, which puts a halt to certain lawsuits, giving the debtor - in this case the city of Stockton - breathing space to restructure its finances.

U.S. Bankruptcy Judge Christopher Klein will hear these cases in his Sacramento courtroom. The hearing comes as Stockton and its major Wall Street creditors gear up for a trial early next year in a fight over the city's eligibility to seek Chapter 9 protection.

City officials have said they believe Stockton's well-planned bankruptcy should be dispensed within a year or two. Less optimistic voices fear the precedent-setting and complicated bankruptcy fight could drag out much longer.

Hittle's attorneys fear the latter and want the judge to lift a stay on his case.

"During that extensive delay, valuable documentary evidence and witness testimony ... will almost certainly be lost," Stockton attorney Mark Adams argues in court papers. Denying Hittle a trial will also deprive him of his constitutional right to a trial, Adams said.

Hittle, 49, early this year lost his fight in the San Joaquin County Superior Court to gain back his job, arguing City Manager Bob Deis didn't have the authority to fire him. The city accused Hittle of attending a Christian leadership conference on the city's time and going soft on discipline.

He next filed suit in federal court, seeking an unspecified amount of money for religious discrimination, retaliation and breach of contract. The city on June 28 filed Chapter 9, putting the suit on hold.

The city has already paid $14,446 to fight Hittle in federal court, and attorneys estimate it could cost up to $400,000, Stockton's lead bankruptcy attorney Marc Levinson said in court papers.

Like Hittle, Salvador Benavides, 26, wants the judge to lift a stay on his lawsuit. On April 12, 2011, Benavides was riding his Kawasaki motorcycle east along Martin Luther King Jr. Boulevard at Sutter Street when the driver of a Toyota Camry turned in front of him.

The intersection - designed and maintained by the city - was known for being dangerous, his Oakland attorney, Lewis Van Blois, argued in court papers, which makes Stockton liable.

The injuries left Benavides with severe brain damage and the maturity of a 12-year-old child. His medical bills have so far risen to more than $750,000. He will need lifelong care but receives a $784 disability check each month, court papers say.

In a third case, the city wishes to settle a lawsuit and be done with it to save the city money. Creditors with hundreds of millions of dollars at stake in Stockton's bankruptcy don't think that is fair to them.

In the settlement, Stockton wishes to pay Christopher Hallon $55,000, and he will agree to drop his suit. It stems from his arrest on Jan. 15, 2010, when two Stockton police officers stopped Hallon, then 29, and a friend while walking near Sutter and Church streets.

Police said Hallon fought them on the corner notorious for drug trafficking.

The officers used a baton and stun gun, drawing accusations of excessive use of force. Hallon, who maintains he was not armed or holding drugs, sued alleging battery, false arrest and the infliction of emotional distress.

The city agreed to settle, figuring it was the cheaper route, drawing complaints from the creditors, including National Public Finance Guarantee Corporation, Assured Guaranty and Wells Fargo.

The creditors wish for the settlement first to be approved by the judge in court, where they can have their say.

"The capital market creditors are owed hundreds of millions of dollars by the city," attorneys for the creditors argue in court documents. "Yet the city seeks blanket authority to enter into settlements with ... creditors of its choosing outside the Chapter 9 process."